sdhou that compare to the way in-house va pross thet sifts are evaluates? >> close enough. frankly, it's -- the system that goes back to a clinic-based system, as there aren't measured outcomes, if you will, from the time most veterans begin their care. at least i would say my experience is solely with the va system. they'll be seen in an amputee clinic, for example, prot prong these is prescribed. receive it on the outside and go back tore a quote/unquote clinic checkout, but no objective measure, if you will other than asking the patient to walk around a little bit and democraten stlat they can, in fact, move with their prosthesis, but there aren't really any functional outcomes tide to the care provided,

either in-house or outside the system. >> okay. i have some additional questions, and we may have a section round, but at this time i'll yield to my colleague, representative donnelley for his questioning. >> thank you, mr. chairman, and to all of you, thank you for your service to our country. and mr. shaw, my nephew is a 2005 academy graduate, and flew helicopters in iraq and as a notre dame grad rit wigraduate u have been unkind to us in football this past season. i'm sorry? >> ohio state is trying to be unkind. football. >> and it was well deserved, mr. shaw. your players were extraordinary to watch every year i've had the chance. i wanted to ask you, as section 812378 prevented the va from

providing veterans with assistive devices they may need? >> i'm not sure i understand the question, sir. >> okay. has that -- have we didn't able to get the best products that the vets have needed through section 8123, or do you think there are better ways? >> i think as we've discussed, there really is very little difference in the products. what we've tried to express to the va that there is no difference in biologics and the particular price we have on federal supply schedule, there's no difference. and our story is that we feel like, as fss contract holder, we can provide the same, if not better products, at a much more affordable price to the taxpayer. >> okay mr. president orace, you indicate that you disagree with the inspector general's audit indicating the average cost of a prosthetic limb made by contractors is more expensive than if the va made it in-house.

whan do you have the average cost of a prosthetic limb made by contractors compared to the va? >> it's hard to answer that question only because when you describe a prosthetic limb you could be talking about a simple below the knee prosthesis, that might run in the neighborhood of the 8 to -- >> on average. >> if the va made it. >> i think remarkable similar. if is was true ap manies to apples comparison, because the reality is the component costs are, should be remtively similar from of the manufacturer to either the va or the outside clinician and then it's a matter of, there are industry standards for what the practitioners make should be relatively similar. ben fit costs, especially, all should be relatively similar. >> where do you think the comparison, like the addis where do you -- what do you think i'm missing? >> well, the hearing two weeks

ago, ig said, they stead was actually footnoted in the report it really wasn't meant to be about apples to apples comparison, and i'm going to pair fraise here. it's that the va didn't have really a good assessment of their own internal kochts and as someone who looks at, you know, our business is pnls pretty closely, my sense is that without knowing those costs, you know, for human resources, et cetera. that's a big component. >> let me ask you this. if there's no handle -- if there's no realization of the cost, as you said, does any comparison even stand up, then if the numbers are not the same? >> in my mind, no. >> okay. women i yield back and, again, thank you all for your service to the country and as you well know, the most important thing question do is to make sure that every veteran is served properly. so thanks again for what you do. >> i thank the gentleman for

yielding back and go to our colleague from michigan. >> thank you, gentlemen, for coming and testifying today. i just have a couple questions. mr. orace, are the members, are the people that work at the va, are they moneys of your association too jie mean do they have the same access to the same prosthetics as the people on the outside? >> yes, she should. >> because they should. >> because one of the questions i have, i've bun amputations and have to deal with orth 3i689s and have people take care of it of my patients and one. things you brought up in your testimony is sometimes simply the fact of going to the va, it's a travel issue, or a comfort issue with the guys you're familiarry. with. do all of these people already have contracts with the va? are we having to deal with this special section a lot?

dealing withwith orth -- >> actually care is provided outside the va system. through contracted, independent contract providers. >> all right. well, i'm just trying to you know, vapor tie ifphi that the kproiing comparable care, highest quality orthotics and all that the care should be comparable. it's more a matter of what is, in fact, the veterans' choice. is testimony receive care local little or go to the va? ip think i hope his is it shoulds the veteran's choice, sh-of-it should be fine within but it's okay outside. >> seems your testimony is sometimes they discourage the outside presence? >> that's absolutely the case. >> all right. so is it the issue that you think that it's just charging? va thinks that they're dharging

too much or already have their own oversaid involve jds is there a reasoning for that? >> i guess i can't speak for what the va's either stated intention is, or unintended steering of patient care. >> in my district i have a very rural district, and supreme to travel all hours to get to the va facility. and especially the contract an orthodontist. might i think increased access to a local or thodist would be completely excellent. let me ask mr. shaw a question. talking about bone implants for the most part? >> yes, sir. bone, any type of device, milk bone, acl tendons, skin grafts, things of that nature. >> for now we have a contractibility, where before people were, for the most part,

going out of the sex 8123? is that the issue here? >> yes, sir. we have an sff contract and were one of the few vendors too took the time to get an sff contract and our situation is, as we're going out and marketsing our contract we're coming up against the leadership that has said -- that is invoking 8123 and saying that because with 8123, they don't strot abide by any contract. that our sff contract is irrelevant in the purchase of biologics. >> i tend to agree with the chairman in that i really don't believe bilodgistics are the same thing as prosthetics, to till the truth and i would preserve to see most people have a contract. some there a wait to jaert tell me the variety? >> we found we're probably 20% to 30% more affordable than some competitors. >> what percentage of the business of the va is way

contractor like yourself, then? is it mostly non-contracted? 81-23. >> yes, sir. it's maybe 97%, off contract, versus our small 3%. wep estimate that the va spends about $175 million annually until biologics and to be honest, there has never been a vendor putting these products on contract. so we've kind of gone through that task and let the va know we're out here and as a small business, we really want to be your partners and it's relatively fell on deaf ears. >> is there a cost structure between your company and the other companies that make the difference in the price that you're aware of? >> i think ---i can't speak for more expecters and what their situations are, i think if you're not asked for a discount, when someone is swiping a purp

card, then therapy not going to get one. >> how much different providers are there of these biologic -- >> six or eight. i would say six or eight that are kprarnl and thprovide good, products. >> my question, then, to the committee, would be to see if we can investigate this a little further. not only does it not seem to be an orthotic to me, just the process itself doesn't seem to be quite right. so appreciate your time. i see my time is up. thanks. >> thank you for yielding back. we'll go mr. beryl from georgia. >> thank you. gentleman, thank you for your testimony. i want you to pitch that hay down real low wherous goats can get at it. with respect to something is as important as prosthetic guidevi money is not object. spent to get folk what's they need.

there's a noble impact in that. spending a lot more and not getting enough for taxpayers and benefit for the veterans at the same time subpoena that the upshot of this? >> yes, sir. >> help me understand how you would rewrite 8123 toll make sure we preserve that directored, money's no whobt trying to replace a vying sights -- we're not going to waste money. how can we change 812378 top continue the attitude we're getting to whatever you need what you need it but not waste money. how should we change 8123? >> sir i don't think you really need 8123. i think most purchases could be -- the federal acquisition regulation does a pretty nice job, i think, nor applications of even prosthetic limbs. >> do up have any concerns that the red tape -- trying to make sure we get stuff off the shelf at the lowest price. it in going to interfere with

folks getting exactly what they immediate with respect to something much more out of the ordinary than something off the shelf? >> yes, sir. there's a va waiver form. if there was something he felt would specifically need for that particular patient, there's a waiver form that is quite easy for them to fill out. i think many clinicians would most likely fill it out for the -- for that patient. >> and in that context, how would things work differently than they do right now jt? if that were -- if we did that? >> i think -- i think what would happen is, there would be several contracted vendors. most likely your more representable manufacture every, what most would use on a straightforward case. again, if you have a patient that needed some vb, the patient would get the care he needed.

>> thank you. mr. orace? same question. anything to add? >> there might about slice difference when it comes to traditional prosthetic care. i'll highlight your first calm was to bly is the dust for those individual patients and they're really not commodity based services. so to that end i think you want to eliminate whatever type of barriers and i don't think you necessarily want to lump it in with something, for example, like biologics. so i would absolutely tighten the definition of 8123 to mean replacement of artificial limbs, and orthopedic devices. >> thank you, mr. shaw. feel the same way? >> i would agree. >> think that would accomplish -- >> i think if -- if the committee felt like their needed to be an 8123 and felt 8123 was necessary, i'd limit to limited access and certainly ensure that

it could not be delegated down. >> thank you, gentlemen. i only got a minute and a half and happy to yield so much of that time as either the ranking member or the chairman would like to v. i thank the gentleman for yeeding back and will sgee a second round. i do have a few more questions and we'll see if our colleagues have any. you tested 80% to 90% of veterans or thod tick care is provided by community-waysed providers. i'm sure this is an unwielding system of contracts. what in your vuch is the advantage of sustaining this contract-based system? >> it's simply that access to their individual provider. and the reality of the va's network. you're right it is unwieldy, but the fact of the matter is, it's that our injured veterans might not be karat -- they want to go back to their own community and

live their own lives. to have to go a va hospital that is more than two hours away is more than an inconvenience. >> maybe you've already answered this ghe some of your comments, but if you were going to design a system, mr. orace for the va to valuate the quality of care what provisions would be nut to improve the quality of care for veterans receive? >> i would start to look at implementation of functional outcome measurement. at the time of the original prescripti prescription, then follow it throughout that veteran's care so that you see there has been restoration of function. that can be done with validated instruments and also technology available that can support that kind of measurement. >> okay. as one of the elements of quality, you described the need to educate veterans about their right to choose a provider for, of prosthetic care. the committee is starting to hear more and more stories about

veteran whose say that the va is creating barriers to their selection of non-va care. what has been your experience? have you heard from veterans that this is a growing problem? >> well, i've seen it locally. i mean, i think that's what i can speak directly to, locally we no longer have access, and it's been at least twol years that our company, while we've had a va contract has not been invited to that amputee clining i referred to previously. or really those referrals are and those, the veterans ability to communicate with the prosthetist are all present in the same building. >> there's that word again. from your point of view, what barriers are preventing veterans from selecting a prosthetist of their own choice? veterans don't know their rights? >> i think unfamiliar of their rights. >> okay. you talked about older veterans

a the your practice complaining that there appears to be new administrative hurdles to prevent their continuing to receive care at non-va facilities. can you give us some examples? >> we've seen in our own facility where veterans who have received care from our company for a number of years, and actually i've heard a similar story from other providers where they've gone back to the va for other services, prescriptions, et cetera, and the patient has been, i'll use the word discovered to be an amputee and they've been directed to receive their care within the va system, versus, again that outside provider. >> okay. i'll yield now to the ranking member and see if he has additional questions. >> no additional questions. >> drp bana.c .c. hek?

>> doctor bana.c. hek? >> you talked about the equality of the orthotic providers and in testimony mentioned, a masters degree program. >> uh-huh. >> is it easy to find people that can do this work? i mean, is there a lot of people out there that do this? i'm kind of kurcurious as to th experiences that you have in finding qualified people to do this job? >> flank rankly, there's probabt enough, between certainly the growing problem we have in this

country with diabetes. we've got increasing veteran population. the baby boomers in general. so the need and demand for these services are growing, and the reality if it is we have a limited number of schools. so graduating students for, that have their -- their training in orthotics and prosthetics. it's an issue and concern, yes, but one we face in the private practice as well as within the veterans administration. >> do you think the qualification for the tipic the va orthotics are pretty much the same as a private practice person? >> i would like to they they are. have two national credentialing agencies, american borpd for certification and the boc and i believe that both inside and outside the va that they should be -- >> those folks are members of your -- >> i believe so. >> is there ongoing certification required for that? >> yog gone continuing education required. yes. >> okay.

i think that's about all i want to ask. thank you very much, sir. >> thank the >> i have no further questions. our thanks to the panel. you are now excused. thank you for your testimony today and for responding to our questions. i now invite the second panel to the table. on our second panel we will hear from doctor charles scoville, chief of amputee for patient care. mr. halliday is accompanied today by mr. nick, director of the bedford office of audits and evaluations and mr. kent.

both of your complete written statements. you are now recognized for five minutes. >> chairman johnson and distinguished members of the subcommittee thank you for your opportunity to provide a perspective and how the department of defense cares in particular prosthetic cares and collaboration. it's always important for us to look back before we look forward to take from lessons learned. the washington post reported in a few days will print a formal evaluation to give officers the opportunity to return to active duty. this was written in 1951. fast forward to 2003 we repeated this within the military return individuals to active duty. to date we have had over 305

individuals who remain on active duty and over 53 of these have redeployed into iraq or afghanistan. the goal of our program is to return patients to athleticism or their preinjury level of activity. it is a philosophy to have our patient tell us how far they want to go and then we work with them to achieve those goals. dod has a significant lowered patient population than the va. our patients are significantly different than the vast majority of the va patients. they are young active service members frequently with severe trauma and multiple limb loss that desire and deserve to return to highest levels of function including returning to active duty. they are strong willed warriors who challenge us daily to improve how we care for them. we start would a small program

and built it into a program recognized as a world leader in amputee care and meeting our patient's needs. va and d.o.d. have long worked together. in 1945 the army prosthetic research lab was established. in 1948 va established the research. many of the devices were continuing to be used at the time the current conflict started. in 2004 congress provided $2.5 million for enhancement and clinical evaluation at walter reed added an additional 10 million in 2005. and the project for upper extremity prosthetic devices. much of the research completed in partnership with the va and would not have been able to complete without the partnership.

the advanced arms developed have been tested in va facilities and migrated to d.o.d. facilities. and the newest research to help our patients return to highest levels of function is a study projected to begin later this year or early next year. this if successful will allow patients who are unable to wear prosthetic sockets to availability to wear prosthetics. why dod has led in the efforts. one of the keys is the interdiscipline air program. we are pulling together players from a wide range to address needs. while ag standard of care required is to be seen within seven days we have set the standards they are seeing within 72 hours. another factor is the logistics and contracting within prosthetic services.

walter reed embedded a warranted contract officer which enables same day ordering of new prosthetic devices with next day delivery. the development of purchase agreements have insured best value through discount prices. a logistics technician provides the ability to warehouse non patient specific items further induces delay of care. a third factor in the success has been the research efforts with partnerships to industry and va and providing new devices such as the micro processor knee and power knee. so the department uses the prosthesis within the facility and enabling the d.o.d.

best value was guaranteed within the contract and in a bid phase of the procurement. the civilian model has wide degree of varaeblt costs. the dod requires offers to list what nonotherwise classified procedures and components they propose to bill for. the representative may reject any bid with a nonotherwise specified code determined to be excessive. our patients receive a significant portion of our care within the administration at va. this is crucial to the success of d.o.d. and va patient care. the d.o.d. does not have the capacity to provide life long prosthetic care for our wounded warriors. we continue to work closely with the va and we have their

providers working in our clinics at walter reed and creates a great relationship where we share knowledge within the system. to a long history of collaborative research we continue to meet the needs of our wounded warriors and veterans. thank you. >> chairman johnson, ranking member connelly, thank you for the opportunity to discuss the results of the dealing with how va acquires prosthetic limbs. i'm accompanied by mr. nick, our director of the bedford audit operations and mr. kent, our director in our atlanta office. before i discuss the results of

our work let me make one thing clear. the oig supports that veterans should be able to receive the limbs that their and their clinicians determine are best for them either va or commercial vendors. our audit focused on the effectiveness of acquisitions and contract administration practices. we did not examine nor do we offer an opinion on the definition of the prosthetics or whether the va labs are the preferred source for prosthetic limbs rather than contract vendors based on cost comparisons or other factors. in our first report we evaluated vha's management and acquisition practices used to buy prosthetic limbs and costs paid for limbs. we identified opportunities for vha to improve payment controls

to avoid overpaying for prosthetic limbs and improved contract negotiations to obtain the best value for prosthetic limbs purchased from contract vendors. overpayments for prosthetic limbs were a systemic issue at all 21 veteran networks. we identified overpayments in 23% of the transactions paid in fy 2010. we found vha overpaid contract vendors about 2.2 million of the total 49.3 million spent on prosthetic limbs that year. the overpayments generally occurred because vha paid invoices that included charges in excess of charges agreed to in contract. we found that contract s officers were not always negotiating to obtain the best discount rates with